Warren Buffett Hates It. AOC Is for It. A Beginner’s Guide to Modern Monetary Theory

There is no doubt that there are currently several debates related to modern monetary theory. In fact, there is a lot of debate that his critics like a hot mess.

For his part, Scott Sumner, who is an economist at Bentley University, recently stated in his blog “MMT has built such a strange, illogical and complicated way of thinking in macro that it is almost insensitive to attacks”. While proponents of MMT say it is the critics who are immune to reason: “part of a degenerative paradigm that has lost credibility”, says William Mitchell, Australian.

Even so, it is necessary to point out that this state of confusion is not good because the Modern Monetary Theory, which was once limited to blogs and a handful of universities, including the University of Missouri in Kansas City, suddenly matters.

Sudden importance

As already mentioned, the Modern Monetary Theory is being given sudden importance. In fact, in the USA. The left wing of the Democratic Party is citing MMT to justify the massive spending by the federal government on a green New Deal to wean the USA from fossil fuels and financing Medicare for all. It is virtually certain that MMT will be drawn into the debates of the presidential race in 2020. So it’s the right time for a semi-deep dive into Modern Monetary Theory: what it is, where it comes from, its advantages and disadvantages.

However, the first academic textbook based on the theory was published in February. The 573-page volume, simply titled Macroeconomics, is by Mitchell, an economist at the University of Newcastle in Australia; Randall Wray of Bard College in Annandale-on-Hudson, NY; and Martin Watts, professor emeritus at Newcastle. This article is based on the textbook, as well as academic articles and blogs by MMTers and its critics.

In this way, it can be mentioned that modern monetary theory says that the world has not yet reached an agreement with the death of the gold standard in 1971 when President Richard Nixon declared that the dollar was no longer convertible into gold. In the modern era of the “fiat” currency, says MMT, the US. UU And other big economies no longer have to worry about having enough gold to back their paper currency, so they are free to print what they need.